Correlation Between Shenzhen Glory and Beijing Wandong
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By analyzing existing cross correlation between Shenzhen Glory Medical and Beijing Wandong Medical, you can compare the effects of market volatilities on Shenzhen Glory and Beijing Wandong and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shenzhen Glory with a short position of Beijing Wandong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Glory and Beijing Wandong.
Diversification Opportunities for Shenzhen Glory and Beijing Wandong
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shenzhen and Beijing is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Glory Medical and Beijing Wandong Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Wandong Medical and Shenzhen Glory is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shenzhen Glory Medical are associated (or correlated) with Beijing Wandong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Wandong Medical has no effect on the direction of Shenzhen Glory i.e., Shenzhen Glory and Beijing Wandong go up and down completely randomly.
Pair Corralation between Shenzhen Glory and Beijing Wandong
Assuming the 90 days trading horizon Shenzhen Glory is expected to generate 6.76 times less return on investment than Beijing Wandong. But when comparing it to its historical volatility, Shenzhen Glory Medical is 1.27 times less risky than Beijing Wandong. It trades about 0.03 of its potential returns per unit of risk. Beijing Wandong Medical is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,497 in Beijing Wandong Medical on August 29, 2024 and sell it today you would earn a total of 184.00 from holding Beijing Wandong Medical or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Glory Medical vs. Beijing Wandong Medical
Performance |
| Timeline |
| Shenzhen Glory Medical |
| Beijing Wandong Medical |
Shenzhen Glory and Beijing Wandong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Glory and Beijing Wandong
The main advantage of trading using opposite Shenzhen Glory and Beijing Wandong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Glory position performs unexpectedly, Beijing Wandong can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Beijing Wandong will offset losses from the drop in Beijing Wandong's long position.| Shenzhen Glory vs. PetroChina Co Ltd | Shenzhen Glory vs. China State Construction | Shenzhen Glory vs. China Mobile Limited | Shenzhen Glory vs. Industrial and Commercial |
| Beijing Wandong vs. Sunwave Communications Co | Beijing Wandong vs. Hubei Xingfa Chemicals | Beijing Wandong vs. Shandong Polymer Biochemicals | Beijing Wandong vs. 360 Security Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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